State-run power utility NTPC has signed agreements to buy gas at around $11 per million British thermal unit (mBtu) for its Kayamkulam power plant in Kerala.
NTPC last week contracted about 1.2 million tonnes of LNG to be imported at Petronet LNG's Kochi terminal from Australia.
"The price is linked to international crude oil prices," a company official said.
LNG from Australia's Gorgon project would cost just over $8.5 per mBtu at a crude oil price of $60 per barrel.
The landed cost at Kochi after including shipping cost and a 5 per cent import duty would be $10 per mBtu, he said, adding the delivered price to NTPC after including regassification charges and local taxes would be over $11 per mBtu.
NTPC signed gas sale agreements (GSAs) with state-run GAIL India, Indian Oil Corp and Bharat Petroleum Corp - the offtakers of the 2.5 million tonnes of LNG to be imported from Gorgon for 20 years.
The price of gas for Kayamkulam would be the steepest that state-run NTPC has contracted for long term supplies.
"We realise that gas is not going to be available cheap. Its a very competitive price considering world demand-supply scenario in 2012 when gas will start flowing from Kochi," the official said.
Kayamkulam plant's first phase of 360 Mw is currently operated with Naphtha as fuel.
Phase-II expansion envisages a total nominal capacity of 1,950 Mw. The tied up regassified-LNG quantity can support the existing Phase-I and one module of Phase-II. Efforts are being made for tie-up of the additional quantities required for Stage II.
R-LNG would be transported by GAIL through a 110 km dedicated sub-sea pipeline to be laid by GAIL. Petronet LNG would complete construction on the Kochi LNG terminal by 2012.
The official said separate Gas Transportation Agreement (GTA) will be signed between NTPC and GAIL, for transportation of the R-LNG.
NTPC, which has a total installed capacity of 30,644 Mw, currently operates nearly 5,000 Mw of gas-based power stations.
